Recent studies of the properties of phospholipid dispersions in water indicate that a higher-order phase transition occurs involving a spontaneous transformation from a unilamellar liquid-crystal state to a suspension of large, unilamellar vesicles upon increasing the ambient temperature. It has been suggested that the unilamellar vesicles that form are a critical state. The thermodynamic properties of this transformation have been inferred primarily from the properties of air-water surface films in equilibrium with the dispersed phospholipid phase. A more direct and conceptually simpler analysis of the thermodynamic properties of this higher-order transition may be attained by measurements of the temperature dependence of the heat capacity of the lipid dispersions. Since transformations of this type are believed to be intimately involved in the assembly of cell membranes, we have developed an extremely sensitive differential heat-conduction calorimeter for measuring heat capacities of aqueous membrane lipid dispersions. (Attempts to measure this transformation in commercial calorimeters have not been successful.) This instrument has certain obvious advantages over the commercial differential scanning calorimeters: reproducibility of loading, q400 micro-J/deg-cm3; baseline stability, q10 micro-J/deg-cm3 per 36 hrs; resolution (q 1 S.D.), q50 micro-J/deg-cm3; sample size, 600 microliters. Measurements on DMPC have confirmed that there is an abrupt change in the heat capacity at the transition temperature, T*, and that the transition temperature identified by the heat-capacity change agrees with values determined by other methods.